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'[OT] size of business, numbers of customers, etc..'
2008\07\13@192748 by William \Chops\ Westfield

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On Jul 13, 2008, at 2:49 PM, Vitaliy wrote:

> Anytime we get a phone call from someone having difficulty using our
> product, we assume that it is a problem with the product's design,  
> not the
> customer's intelligence or motor skills.

Ah.  A luxury that comes from selling 100x $1000 boxes rather than  
10000x $100 boxes!

Seriously: providing "niche" tools and products is a very different  
business than running a "standard" manufacturing facility.  There's a  
lovely time period in high-tech startups where "the engineers" get to  
do everything from picking parts to boxing shipments and doing  
customer support.  But it doesn't scale infinitely, and sooner or  
later you have both a customer support department AND customers  
worthy of Dilbert cartoons (entirely separate from the cartoons about  
engineering management!)
I have fond (sort-of) memories of the first "clueless" support  
engineer I had to deal with.  He couldn't figure out the low bits of  
a decimal number (as in "the tty number is encoded in the low 8 bits  
of the tcp port number", for example), but he was quite good at  
digging an answer out of engineering, and hand-holding the  
customers.  (at least, customers who were similarly clueless.  
Another frequent complaint as we got bigger was from the customers  
who had LOTS of clues is that they could not longer call customer  
service and end up talking with someone who knew more than they did  
(nor anyone able to have a technical discussion on what COULD be wrong.)

Make no mistake; doing "customer service" is HARD, and doing it well  
for large numbers of customers is VERY hard.  Having been involved  
in most of the possible sizes of a growing startup from "small" to  
"very large indeed", I can definitely see the attraction of  
maintaining a company size on the "small" size.  Dollars of sales,  
absolute profit, and extreme growth are not the only measures of  
"success."

BillW

2008\07\14@004043 by Vitaliy

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"William "Chops" Westfield" wrote:
>> Anytime we get a phone call from someone having difficulty using our
>> product, we assume that it is a problem with the product's design,
>> not the
>> customer's intelligence or motor skills.
>
> Ah.  A luxury that comes from selling 100x $1000 boxes rather than
> 10000x $100 boxes!
> Seriously: providing "niche" tools and products is a very different
> business than running a "standard" manufacturing facility.

Bill, we've passed the 10000 units point a long time ago. I'd say we're more
of a "standard" manufacturing facility, where manufacturing costs exceed the
costs of engineering a product.

> There's a
> lovely time period in high-tech startups where "the engineers" get to
> do everything from picking parts to boxing shipments and doing
> customer support. But it doesn't scale infinitely, and sooner or
> later you have both a customer support department AND customers
> worthy of Dilbert cartoons (entirely separate from the cartoons about
> engineering management!)

You're attacking a straw man of your own making. Show me where I advocated
having the engineers pick parts, box shipments, or do customer support.

[snip]
> Make no mistake; doing "customer service" is HARD, and doing it well
> for large numbers of customers is VERY hard.  Having been involved
> in most of the possible sizes of a growing startup from "small" to
> "very large indeed", I can definitely see the attraction of
> maintaining a company size on the "small" size.

Providing good customer service is not as hard as you make it sound.  We've
been doing it quite successfully for a number of years. There are a number
of simple common-sense guidelines that need to be followed, not the least of
them is to give the customer the benefit of a doubt, instead of right away
assuming he's an idiot. Joel Spolsky has a good article on customer service:

http://www.joelonsoftware.com/articles/customerservice.html

But the key idea is that you need a positive feedback loop between the tech
support folks and the engineering department. Joel puts it this way:

"...you can't outsource tech support: they have to be right there at the
same street address as the developers, with a way to get things fixed. Many
software companies still think that it's "economical" to run tech support in
Bangalore or the Philippines, or to outsource it to another company
altogether. Yes, the cost of a single incident might be $10 instead of $50,
but you're going to have to pay $10 again and again.

When we handle a tech support incident with a well-qualified person here in
New York, chances are that's the last time we're ever going to see that
particular incident. So with one $50 incident we've eliminated an entire
class of problems."

Experience proves the validity of this approach again and again. I can give
you numerous specific examples where a relatively simple change resulted in
substantial savings. Quality is indeed free.

> Dollars of sales,
> absolute profit, and extreme growth are not the only measures of
> "success."

What about "staying in business", is that a good measure of success?

It's about fundamental economics principles, and simple math. Lower price
means higher demand. Assuming two companies have the same development costs,
the one that sells more units will win in the end -- because the fixed
overhead is getting divided into the number of units sold.

To use an example from the original thread, if your development cost is
$50k, selling 10 units at $1000/each will leave you $40,000 in the hole. If
you sell 1000 units at $100, you make $50,000.

Vitaliy

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